Seizing the Silver Economy Opportunity: An In-Depth Guide to Tax Incentives for Community-based Domestic Service Industries

As China’s population aging accelerates, the “silver economy” is emerging as a vital engine for socio-economic development. To actively address demographic trends and support the healthy growth of community-based domestic service industries, multiple ministries—including the Ministry of Finance, the State Taxation Administration, the National Development and Reform Commission, the Ministry of Civil Affairs, the Ministry of Commerce, and the National Health Commission—have jointly issued and extended the Announcement on Tax and Fee Preferential Policies for Elderly Care, Childcare, Housekeeping, and Other Community-based Domestic Services (extended to 2027). This suite of policies reflects the state’s high priority for public welfare services and delivers substantial tax and fee reduction benefits to relevant enterprises. It supports the transformation of the elderly care industry from a “sunset undertaking” into a “sunrise industry.”

Detailed Explanation of VAT Exemption Policy

Policy Core: Income derived from providing elderly care, childcare, and housekeeping services to communities is exempt from Value-Added Tax (VAT).

Applicable Entities and Scenarios:

·         Community Elderly Care Services: Institutions providing services such as daily living assistance, rehabilitation nursing, meal/transportation aid, and emotional support for the elderly. These services are delivered through short-term stays, day care, or in-home visits, utilizing fixed community venues and facilities.

·         Community Childcare Services: Institutions providing full-day, half-day, or hourly care and nurturing services for infants and children under 3 years old (inclusive).

·         Community Housekeeping Services: Institutions entering private residences or medical facilities to provide care, cleaning, cooking, and other services for groups such as pregnant women, infants, children, and the elderly.

Policy Validity Period: January 1, 2026, to December 31, 2027.

Corporate Income Tax: Reduced Income Calculation

Policy Core: When calculating taxable income, 90% of the income derived from providing the aforementioned community services is included in the total revenue.

Practical Example: Take a Shanghai-based elderly care institution with 2025 revenue of RMB 1 million and costs of RMB 500,000. Taxable Income = (RMB 1 million × 90%) – RMB 500,000 = RMB 400,000 Applying the preferential tax rate for small and low-profit enterprises (5%): Corporate Income Tax Payable = RMB 400,000 × 5% = RMB 20,000

Policy Validity Period: January 1, 2026, to December 31, 2027.

Deed Tax and Related Fee Reductions

Policy Coverage:

1.    Deed Tax Exemption: Deed tax is exempted for acquiring houses or land used to provide community elderly care, childcare, or housekeeping services.

2.    Related Fee Reductions:

·         Exemption from real estate registration fees, cultivated land reclamation fees, land rehabilitation fees, and land idle fees.

·         Exemption from urban infrastructure supporting fees.

·         Exemption from civil air defense basement alternative construction fees under eligible circumstances.

Policy Validity Period: January 1, 2026, to December 31, 2027.

Strategic Recommendations and Action Guide

1.    Qualification Review and Service Alignment: Enterprises must clearly define how their service offerings align with community-based scenarios, ensuring compliance with the policy’s defined service scope and operational models.

2.    Tax Compliance and Filing Optimization: Systematically plan tax management processes by integrating VAT exemptions and income calculation reductions to fully leverage policy benefits.

3.    Asset Allocation and Cost Control: Actively utilize deed tax and fee reduction policies to optimize the deployment of assets like properties and land, thereby reducing initial investment and operational costs.

4.    Long-term Strategic Planning: The policy window (2026-2027) is a critical period for institutions to expand community service networks and enhance service quality. Enterprises are advised to develop medium-to-long-term development plans, strengthening brand building and service innovation.

Conclusion

The wave of the silver economy has arrived, with policy dividends continuing to be released. Enterprises in the community-based domestic service sector should proactively seize this window of tax incentives. By integrating business and financial strategies, they can achieve a dual enhancement of social value and commercial performance. Let’s work together to promote the high-quality development of elderly care services, jointly build an age-friendly society, and allow the “sunset undertaking” to radiate with “sunrise vitality”!

If you have any questions, feel free to contact us to discuss further.